Year in review: Video game industry pins hopes on hits

With the global economy on the brink of collapse, those in the video game industry are holding on tight to the notion that their business is, if not immune from the financial woes, then at least more protected than those in other sectors.

One argument for that is a combination of the long-held theory that even in tough times, people still spend on entertainment, and the idea that video games offer one of the most cost-effective forms of entertainment going.

Of course, it's too early to tell if the games industry will escape the general blood-letting that seems certain to be on its way. But if it does, the most significant component may well turn out to be the pipeline of mega-hits that are on their way. And 2008 has already seen a flood of these monster hits, including the record launches of Take-Two's Grand Theft Auto IV, Activision's Guitar Hero and Harmonix's Rock Band franchises, Nintendo's Wii Fit and Blizzard Entertainment's World of Warcraft: Wrath of the Lich King.

Credit: Daniel Terdiman/CNET News

Wrath of the Lich King, the second World of Warcraft
expansion, sold 2.8 million copies in its first day.

The game consoles, too, have seemed to continue to show strength as the holidays approach, at least Microsoft's Xbox 360 and Nintendo's Wii. Microsoft said that its console had a 25 percent increase in Black Friday sales over 2007, while Nintendo said it plans to boost holiday 2008 supply of the Wii by 50 percent over last year in hopes that consumers will be able to find one of the popular machines before Christmas.

Of course, the major reason Microsoft is seeing such large sales for the Xbox this fall is that it announced earlier in the year that it was cutting the price of the lowest-cost version of the Xbox to $199, making it the cheapest next-generation console. The Wii is just a tick higher, at $249, and Sony has not yet been able to get its price down below $399.

One of the biggest dramas of the year was the courtship by Electronic Arts, the world's-largest video game publisher, of Take-Two. In February, EA offered $2 billion to buy Take-Two, an amount it said took into consideration the expected profits of Grand Theft Auto IV. But Take-Two demurred, ostensibly holding out for a larger offer it thought it would merit upon the release of GTA IV. And for months, the two companies fought a media back-and-forth, with EA again and again extending its "deadline" for Take-Two to make up its mind. In the end, EA found itself spurned, as the GTA publisher decided to stay solo.

At the same time, EA may have gone through the biggest anticlimax of the year, with its launch of Will Wright's much-anticipated evolution game, Spore. The game had decent sales and got good reviews, hitting 1 million units in less than a month. But didn't even approach the record numbers some had predicted. One reason may have been the digital-rights management software that EA put on the game's DVD, something that seems to have angered many buyers.

But the best news of the year for the video game industry may have come in September when its archenemy, attorney Jack Thompson, who regularly attacked it for what he saw as its promotion of violence and sex, was disbarred.